China December CPI likely below 5 pct

China's consumer price index (CPI) will probably fall below 5 percent as government measures to control prices take effect, the country's top economic planning body said Saturday.

Government measures have started to take effect, with vegetable prices falling and grain and cooking oil prices stabilizing, the National Development and Reform Commission (NDRC) said in statement on its website.

The base effect alone will reduce December's CPI by one percentage point, it said.

The statement came after the National Bureau of Statistics (NBS) said Saturday China's CPI rose 5.1 percent year on year in November - a 28-month high - compared with October's 4.4 percent rise.

NBS spokesman Sheng Laiyun said rises in the price of food, housing and utilities drove inflation higher. The data showed that China's CPI rose 3.2 percent year on year in the first 11 months, surpassing the government's full-year target ceiling of 3 percent.

According to initial estimates, the November CPI is the peak for the year, the NDRC said.

Rising prices have prompted the government to take measures to rein in rising prices. The measures include boosting supply of essential goods, giving financial aid to the needy, and mopping up excess liquidity.

The central bank on Friday ordered banks to hold more funds in reserve, the sixth such order this year. The central bank announced in October its first interest rate hike in nearly three years.

The NDRC warned the CPI will remain at an elevated level in the first quarter of next year.

China said on Dec. 3 it will next year switch its monetary policy stance from "relatively loose" to "prudent" to tackle inflation while it keeps economic growth sustainable.

The policy stance change lays a foundation for stabilizing prices, with "prudent" monetary policy being the ultimate tool for checking price hikes, the statement said.